2014 (2) TMI 693 - AT - Central Excise

Availment of CENVAT Credit - Use of steel items for fabrication of tanks - Revenue held that appellant would not be eligible availing credit on steel items as the same appear to have been used in erection of permanent supporting structure used mainly for making the machinery of vibration fee - Held that - The appellant s claim is that they are eligible for Cenvat Credit in respect of steel items, in question, as the same have been used by them for fabrication on capital goods/parts of capital goods namely tanks and accordingly the steel items would have to be treated as inputs used in the manufacture of capital goods and would be eligible for Cenvat Credit. It is also seen that para 2 of the Show Cause Notice itself states that on scrutiny of the said returns filed by the appellant, it was revealed that they have taken Cenvat Credit on the structural steel items like Angle, Channel, Beam used by them in manufacturer of parts of capital goods and that Cenvat Credit was availed appears to be inadmissible. Since in this case the availment of Cenvat Credit in respect of Steel items, in question, and their use has been declared for ER-1 Return, it was the responsibility of Jurisdictional Assistant Officer to immediate verify their claim and as such it cannot be said that the appellant did not disclose the availment of Cenvat Credit in respect of the inputs in question of their use. Therefore, the appellant have strong prima facie in their favour on limitation and hence the requirement of pre-deposit Cenvat Credit demand, interest thereon and penalty is waived for hearing of the appeal and recovery thereof is stayed - Stay granted.

Summary

Issues:
1. Eligibility of Cenvat Credit on steel items used for fabrication of tanks.
2. Time limitation for recovery of Cenvat Credit.
3. Requirement of pre-deposit for hearing the appeal.

Analysis:

Issue 1: Eligibility of Cenvat Credit on steel items used for fabrication of tanks:
The case involves the appellant, a manufacturer of various aluminum products, claiming Cenvat Credit for steel items used in the fabrication of tanks. The dispute arose when the Assessing Officers questioned the eligibility of the appellant to avail credit on steel items used for tanks. The Show Cause Notice was issued for recovery of the credit, and the demand was confirmed with penalties. The appellant argued that the steel items were used for capital goods and thus eligible for Cenvat Credit. The Commissioner (Appeals) upheld the denial of credit, stating that the appellant failed to provide sufficient evidence to support their claim. The appellant contended that they had declared the credit in their ER-1 Returns, indicating no suppression of facts. The Tribunal noted that the steel items were declared in the returns, shifting the burden to the Jurisdictional Assistant Officer to verify the claim. Consequently, the Tribunal found a strong prima facie case in favor of the appellant and waived the pre-deposit requirement for hearing the appeal.

Issue 2: Time limitation for recovery of Cenvat Credit:
The appellant argued that the Show Cause Notice seeking recovery of Cenvat Credit availed from a specific period was time-barred as they had disclosed the credit in their returns. The Tribunal considered the appellant's declaration in the returns as a disclosure, shifting the responsibility to the Assistant Officer to verify the claim promptly. As a result, the Tribunal found in favor of the appellant on the limitation issue and waived the pre-deposit requirement for the appeal.

Issue 3: Requirement of pre-deposit for hearing the appeal:
The appellant requested a waiver of the pre-deposit requirement for hearing the appeal, citing a strong prima facie case in their favor. The respondent opposed the waiver, emphasizing the lack of evidence provided by the appellant to support their claim for Cenvat Credit on steel items. However, the Tribunal noted that the appellant had declared the credit in their returns, placing the onus on the Assistant Officer to verify the claim promptly. Consequently, the Tribunal allowed the stay application, waiving the pre-deposit requirement for the appeal.

In conclusion, the Tribunal found in favor of the appellant on the issues of Cenvat Credit eligibility, time limitation for recovery, and the requirement of pre-deposit for hearing the appeal, ultimately allowing the stay application and waiving the pre-deposit requirement.